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22 December, 19:20

Annie invested in a set of stocks and made $4,000 in profit. She has learned that she will have to pay taxes on the profit she has made. Here are the tax rates affecting Annie's investment: State tax: 5% Federal tax: 25% Annie must pay in taxes to the state government on her investment. She also must pay in taxes to the federal government. As a result of the money she will lose to taxes, the real value of Annie's profit is.

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  1. 22 December, 19:42
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    1. $200

    2. $1,000

    3. $2,800
  2. 22 December, 20:53
    0
    Answer: Real value of Annie's profit = Profit made on stocks - State Tax paid - Federal tax Paid

    = $ 4,000 - (0.05 i. e. 5% of $ 4,000 + 0.25 i. e. 25% of $ 4,000)

    = $ 4,000 - ($ 200 + $ 1,000)

    = $ 4,000 - $ 1,200 = $ 2,800

    Explanation: The state and federal taxes of 5% and 25% respectively, both are computed separately on the profit made by Annie of $ 4,000.

    The Real Value of Annie's profit is thereby computed by deducting the amounts of legal tax liabilities from the profit made.
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